Continuing education for condo board directors

by | Condo & HOA Focused, Governance

Condominiums are complex entities to manage, yet they are governed by elected directors who are not required to have any relevant expertise. Most new directors have no prior experience on a condo board. If a director has expertise pertinent to the condominium, it is luck of the draw.

Director Responsibilities

Condo directors shoulder heavy responsibilities and make decisions with significant financial implications. The consequences of poor decisions can be profound, even if the decision was welcomed in the short term. Keeping condo fees low makes owners happy until years later when an inadequate reserve fund must be topped up with a large special assessment to fund a major repair and replacement project.

Condominiums across Ontario and in many other localities face the challenge of aging infrastructure and new pressures to implement climate-friendly and energy-efficient solutions that require cutting-edge technologies that have not yet been widely implemented. Navigating this area requires extraordinary effort and knowledge.

What happens when directors make the wrong decision? Mostly nothing. The courts have been reluctant to charge directors for bad decisions. Did they commit fraud or negligence, or was it just an honest mistake?

There are no condo police. No one reviews a board’s decisions. No penalties get assessed when the boards screw up. It doesn’t matter if it was an honest mistake; honest mistakes can have painful consequences. Appointed administrators step in to rescue the worst condo boards, but this is done as a last resort and should never be implemented unless absolutely necessary. Bringing cases of fraud or negligence to trial is costly and time-consuming.

Is Continuing Education the Answer?

Continuing education is hailed as a means for directors to develop the necessary skills and expertise. The Oxford Dictionary defines continuing education as “education provided for adults after they have left the formal education system, primarily comprising short or part-time courses.”

The Condominium Authority of Ontario program meets the definition of continuing education. It is an online mandatory program consisting of twenty-one modules on topics ranging from the role of directors to condo management. Directors complete modules at their own pace as long as they are completed within six months of becoming a director. If this requirement is unmet, a director will be disqualified from the board.

Mandatory Training

Even though the CAO mandatory training provides a solid foundation, directors can never stop learning and continue to gain experience over their terms. Directors are expected to seek the appropriate expertise when needed. Depending on the specific situation, directors will consult with their legal counsel, engineer, accountant or other expert or even a combination of several experts. These experts provide sound advice, but the board must make and understand their decisions. Condo managers are critical to any discussion, but making the final decision is the board’s responsibility.

Making decisions in the best interest of the condominium requires directors to be as well-informed as possible about their condo and knowledgeable about condominiums in general. Condos need expert directors, but volunteer directors don’t become experts overnight.

Can continuing education be more effective? Here are eight ideas to consider.

Handover Meetings

Encourage boards to hold handover meetings and invite retiring current directors to provide updates on ongoing activities. While the meeting is most relevant to new directors, take advantage of the opportunity to discuss ongoing issues more broadly and discuss the future of the condo as a group. It is also an opportunity to discuss board policies, conflicts of interest, and any other issues that could benefit from current and retiring directors being together. Be sure to ask if a retiring director could be consulted.

Legacy Documentation

Ensure retiring directors leave behind detailed records, including:

  • Document decisions, highlighting the reasoning behind them.
  • Lessons learned to guide new directors.
  • Handover notes.

Use technology to capture and store this knowledge securely to prevent loss.

Council of Advisors

Establish a team of veteran directors willing to offer consultancy services to boards. To make the council effective, create a mechanism for feedback and compensation for these advisors. Directors on the council will have no ties to industry and follow the strictest conflict of interest guidelines, ensuring that their advice is unbiased. Advisers can also help boards through decisions.

Incorporate Real-life Experience in Training

Engage current and past directors in CAI’s mandatory training. Add panel discussions, roundtables, video presentations, interviews, discussion groups, or other format to the existing content from CAI programs.

Director-only conferences

Facilitate platforms where current and past directors can network, share, and learn from each other.

Promote Committees

Encourage the formation of both permanent and ad hoc committees that can delve into specific condo challenges. Invite past directors and owners with particular expertise to be committee members. Engage consultants as part of the process as needed.

Neutral Directors’ Intervention

Develop a system where directors from other condos could be consulted about owner-board or manager-owner disagreements before the dispute gets out of hand.

Create learning opportunities for owners

Knowledgeable condo owners understand their roles and responsibilities and become active & knowledgeable participants in their condominium communities.

Continuous Learning

Directors will continue to learn over their terms. Preserving their knowledge when directors leave their positions is even more critical. Directors bring perspectives that lawyers, engineers, accountants and condo managers do not have and have inside information about their condo that no one else has. Ensuring that condo board directors are up to governing complex multi-million-dollar buildings will positively affect the condominium’s overall financial and social well-being and reduce risk over the long term.